Wednesday, June 8, 2016

Sole-sourcing and soul-searching.

RAAF Super Hornets
An official announcement has yet to be made, but the Trudeau's government's rumored acquisition of Super Hornets has already drummed up controversy.  Not the least of which conjures up the dreaded "S-word"...  No, not that one.

We are talking about the dreaded act of "sole-sourcing".  The awarding of a fat government contract without a full bidding process.  This does indeed raise concerns, as the vender is under no pressure to provide competitive pricing.  Unfortunately, the rumored "interim" Super Hornet acquisition does exactly that.

So why would the governing Liberals do this, especially after campaigning on the promise to hold an open and fair fighter competition?  Not only does this seemingly break an election promise, but if makes them appear as hypocrites after criticizing the Harper government for sole-sourcing the F-35.

Is sole-sourcing truly such a bad thing, however?

Let us look at a few examples, conveniently all provided by the former Harper government.

CC-130J Super Hercules
In 2008, Canada signed on to take possession of 17 new C-130J Super Hercules tactical airlifts.  These new Hercs, while looking nearly identical to old C-130E and C-130H already in use by the RCAF, do offer a substantial upgrade to their predecessors.

The C-130J, or "Super Herc" offers updated engines, avionics, and the RCAF version offers a "stretched" fuselage.  Altogether, the "J" model Herc offers a substantial improvement on older models.  It is faster, requires less crew, requires less take-off distance, and has a much improved range.

The Super Herc's acquisition went smoothly.  All aircraft were delivered on time and on budget.  The fact that is was sole-sourced was not an issue as the C-130J was seen as a logical and easy upgrade to Canada's older CC-130 fleet.

CC-17 Globemaster III
Like the Super Herc, the C-17's Canadian acquisition happened with little fuss.

The Canadian Forces initially depended on others for large-scale equipment transport during operations in Afghanistan.  Embarrassingly, Canada had a clear and immediate need for a large, strategic airlift.

As luck would have it at the time, the US Congress was steadfast in insisting that Boeing continue production of the C-17 Globemaster III.  This, despite the fact that the USAF had  more than though at the time.  This allowed Canada to simply take possession of aircraft that were already being built on the assembly line.

Like the Super Herc, nobody really questioned the C-17 buy.  The only real competitor, the Airbus A-400M Atlas, was still in development.  Canada had an immediate need for a heavy airlift, and the C-17 was the only game in town.

Like the Super Herc acquisition, the C-17's procurement went off with nary a hitch, on time and on budget.  It is hard to imagine the RCAF without it now.

CH-147F Chinook
The most frustrating thing about Canada's CH-147F purchase is that it never should have been needed in the first place.  The Canadian government foolishly sold its five still-viable CH-147Ds after using them for all of two years.  Those D-model Chinooks were bought used and in a rush from the US Army.  Before that, Canada had recently retired it CH-47C Chinook fleet back in 1991.

Yes.  The Canadian government sole-sourced a helicopter to replace a sole-sourced helicopter that replaced an older version of that helicopter that went 10 years without replacement.  This is made even more ridiculous by the fact that Canada resorted to leasing Russian heavy-lift helicopters for a time.

Making matters worse, the Canadian CH-147F Chinook had a unique set of RCAF-driven requirements.  These included "fat" fuel tanks for extended range, more powerful generators for twice the electrical power, a new avionics suite, and more.  This "Canadianization" cost an extra $360 million dollars (that's an extra $24 million each for 15 aircraft) and an extra year of waiting.

The Chinook is an impressive helicopter and a welcome addition to the RCAF...  But its history in Canada is an absolute mess.

F-35 (You knew we were getting to here...  Right?)

What can we say about Canada's topsy-turvy F-35 procurement that has not already been said?

In 2010, then-Defence Minister Peter Mackay announced that Canada would purchase the F-35 Lightning II...  Then he announced there would be a competition...  Then, six weeks later, announced that Canada would purchase 65 F-35s for $9 billion.  In 2011, Canada's Parliamentary Budget Office reported that 65 F-35s would cost over $30 billion over the next 30 years.  In 2012, a KPMG produced audit announced that the F-35 would cost roughly $46 billion over it lifetime.  Later that year, the Tory government announced a "reset".  No order was ever signed.  No commitment ever made.

After six years, the Canada's F-35 procurement is still a mystery.  The new Trudeau government has stated that they will hold a fighter competition, and recent reports state that the Super Hornet may be acquired as an "interim" fighter.  The F-35 has still yet to be ruled out.

Super Hornet
If the rumors pan out, Canada may very well be on the verge of a sole-sourced Super Hornet deal.  Is it justified?

Canada does need new fighters.  That much is clear.  The current fleet of CF-18s are set to expire in 2025, even with extensive refurbishment programs.  Nine years may seem like plenty of time, but not when you factor in a proper fighter competition followed by a selection, followed by complete delivery and training.  Each part of this process can take several years.  Even if Canada were to hold a fair and open fighter competition, there is a very good chance that the CF-18 would be phasing out faster than a new fighter could be phased in.

The Super Hornet's case is helped by the fact that, like the CC-130J and CH-147F, it is an updated variant on an aircraft that Canada already has.  Well...  Sort of.

Since getting the Super Hornet is to be an interim solution, we should be able to get some affordably and quickly.  That should not be much of a problem, as Boeing has been rather desperate to keep the assembly line open.  The Pentagon would also very much like to keep Boeing making fighter jets, although it does not have the budget to do so, thanks to the F-35.  The USN lists the Super Hornet as first on its "unfunded priority list".  By all accounts, Boeing is a "motivated seller".




A quick, low-volume order of F/A-18E/F Super Hornets may in fact be a best case scenario when it comes to sole-sourcing.  The need is there.  A capable, affordable, and familiar solution exists.  Procuring even a small number of Super Hornets benefits the RCAF, Boeing, and even the US Government.  It could also likely save the Canadian taxpayer some money by reducing or forgoing the purchase of a much more expensive alternative.

In this case, sole-sourcing seems to be a no-brainer.

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